BETCs, Biofuels and Boondoggles

Oregon State Legislature sent this bulletin at 08/23/2016 10:01 AM PDT

Oregonians have endured unending cries from proponents of
big government for more than a decade, claiming the State must have more revenue
to run its operations. Those constant pleas, combined with Democrat dominance
of both the House and Senate for the past dozen years, have resulted in
frequent tax and fee increases levied on Oregon citizens and businesses.

Proponents of ever-increasing government spending
universally fail to acknowledge that state government has a spending addiction.
Typically absent from their discussion is any reference regarding where the new
revenue has been spent and what that spending has achieved. Also missing is any
narrative regarding the wasting of taxpayer money on multi-million dollar
boondoggles that should never have been allowed to happen.

Political leaders have failed to prioritize programs that
provide needed services to Oregonians. Instead, state officials have spent literally
hundreds of millions of dollars on attempted social engineering and “market
transformations,” often under the guise of protecting the environment. Their
explanations are usually devoid of any accountability for the use of other
peoples’ money.

Citizens should ask if we are better off in the aftermath
of all that spending. I have observed little, if any, improvement in either the
level or quality of services provided to our residents during my three terms serving
in the Oregon Senate. What I have observed instead is rampant crony capitalism,
where favored industries and constituencies receive huge chunks of public money
with little or no accountability for what that money buys.

Senate Bill 324, was signed
into law during the 2015 legislative session by newly appointed Governor Kate
Brown. The Act extended the sunset on the state’s so-called Clean Fuels program,
enabling the controversial agenda to move forward. The divisive law was passed
on party-line votes with unanimous opposition from Republicans in both chambers
and Senator Betsy Johnson (D-Scappoose).

Borrud’s article takes a look at where the Program is about
six months after the enactment of that law. “Oregon has just one commercial ethanol production plant right now,
despite sinking $51.3 million worth of various incentives into ethanol projects
in the decade leading up to the new law. The state also has only one commercial
biodiesel plant, after awarding $6.1 million in biodiesel production incentives
during the same period.”

The biofuels program under SB 324 promised those incentives
would be used to create jobs in Oregon because fuel providers would switch to
biofuels in the name of reducing greenhouse gas emissions (GHG). That promise was
broken. Borrud’s article points out that much of the ethanol being used in
Oregon is not produced in Oregon. Rather, it is imported by rail from states
such as Minnesota, Kansas and Nebraska.

An ethanol plant in Boardman received Business Energy Tax
Credits (BETCs) worth $10 million and originally planned to hire up to 100
employees. It is our understanding the
plant has produced no commercial cellulosic ethanol and currently employs about
15 people. The only Oregon business currently producing ethanol for fuel
companies is also based in Boardman. It received $14.6 million in BETCs.

Another plant in Clatskanie obtained nearly $8 million in
BETCs, as well as a $20 million loan. Approximately $18 million of that loan
was written off by the state after the company filed for bankruptcy. The
Clatskanie facility was converted to a crude oil transfer facility after the
company filed for bankruptcy. It has since been retrofitted again to handle
ethanol shipments heading out of state.

Nearly $750,000 in BETCs were given to a company in
Cornelius that has not produced any biofuels for the people of Oregon. An
official from the Department of Environmental Quality (DEQ) is quoted in
Borrud’s article stating that despite all the incentives, the company produces
only small quantities of ethanol. She went on to say that DEQ is now expecting
much of the state’s alternative fuels to come from landfill and other waste
gases instead of biofuels.

Moreover, according to DEQ figures,
the Clean Fuels program will impose hidden taxes up to 19 cents per gallon of
motor fuel. All of that revenue will flow to out of state and international
green energy companies. None will be used to maintain and improve Oregon
streets and highways.

Finally, the Clean Fuel program was promoted as a means to
reduce GHG. To date, DEQ has been unable to provide
objective, statistically significant data demonstrating the program will
produce any significant reduction in GHG emissions.

By any objective measure, the Clean Fuel program is
destined to be a complete failure.

State government’s insatiable appetite for spending other
peoples’ money is embodied in what promises to be a very expensive and divisive
campaign for Measure 97. It
will levy a new tax on businesses that is expected to raise around $6 billion
per biennium if passed by voters this November.

Much of the rhetoric surrounding Measure 97 is the same that
was used to promote Measures 66 and 67. In
that 2009 campaign, the supporters maligned companies that create jobs and
opportunities for Oregon for supposedly not paying their “fair share” in taxes.
Voters approved both measures in a special election held in January 2010.

Proponents of Measure 97 are falsely claiming the money it would
raise must be spent for funding public education, health care and services for
senior citizens. However, short of a
constitutional amendment, it is not possible to bind how future legislatures
spend General Fund money. This has been verified by
Legislative Counsel, the attorneys who draft all of the bills and provide
legislators with legal opinions.

The Democratic co-chairs of the budget-writing Ways and
Means Committee have also gone on the record verifying the Legislature will be free to spend Measure 97
money however it wants. One co-chair acknowledged that some of it could,
indeed, be used to offset some of the $885 million in projected increases of
the state’s Public Employee Retirement System.

Another salient fact is never mentioned by supporters of the
Measure. According to the non-partisan Legislative Revenue Office, state tax
collections have been and remain at historical highs.Even without Measure 97 revenue, Oregon
government has never before had so much money to spend.

The Taxpayers Association of Oregon recently determined
that Oregon is the number one tax-and-spend state in the Western United States. The state and local
governments here spend more per capita than our neighbors and 39 other states.
When that level of government spending is divided by population, Oregon spends
over $8,000 per resident. That is nearly double what is spent in Utah, and well
above what is spent in Washington and California.

Backers of the measure have even tried strong-arming economists they hired to analyze the measure. They
apparently wanted the economist to distort what the Measure actually will and
will not do. The editorial board of the Bend
Bulletin newspaper was among those objecting
to those tactics.

Other tactics allegedly employed by proponents have resulted in a complaint being filed with the state’s elections division. If verified and
upheld by the courts, the election law violation complaints could result in
felony charges.

Despite all of the seeming dishonesty and underhanded
tactics surrounding it, state officials are refusing to change the
voter pamphlet statement submitted in support of the Measure.

Oregon
voters are once again being asked to support higher taxes to fund state
government programs. Governor Kate Brown has endorsed Measure 97 and is already
planning how to spend the $6 billion in new revenue. Majority Democrats would
better serve the public by working to reduce out of control state spending
before asking the people of this state to fill government coffers with
additional dollars.

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